Oil prices spike on new Wall Street bailout
SIOUX FALLS, S.D. : Oil prices jumped about $5 to nearly $55 a barrel yesterday, riding the coattails of the broader market on news that the U.S. government will bail out Citigroup. Light sweet crude for January delivery rose more than 9 percent, or $4.65, to $54.58 a barrel on the New York Mercantile Exchange. Prices hit $55.30 at one point. Phil Flynn, an analyst at Alaron Trading Corp., said oil initially seemed to be heading downward, dropping to $48 overnight even amid talk about possible production cuts by OPEC. Then news that the government will take a $20 billion stake in Citigroup and guarantee hundreds of billions of dollars in risky assets gave both the stock market and oil a boost. Flynn said it's likely a short-term bump and he doesn't think investors are betting that the market has hit bottom.
Rising chance seen of automaker default
NEW YORK : Credit ratings agency Standard & Poor's warned yesterday that one of the three U.S. automakers could default over the next 12 months as financial situations worsen. S&P; said its rating on General Motors Corp., Ford Motor Co. and Chrysler LLC is now "CCC+," well into noninvestment-grade territory and four notches away from a "D," or default, rating. All three automakers have negative outlooks, meaning another downgrade in the near future is likely. The outlook in other major auto markets, including Europe, has also worsened, S&P; said. The agency added it continues to expect worsening vehicle sales into next year, and does not expect the recent decline in gasoline prices to rekindle demand for large pickups and sport utility vehicles.